SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 10-K/A
Amendment No. 1
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended July 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-10615
EMISPHERE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3306985
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
765 Old Saw Mill River Road
Tarrytown, New York 10591
(Address of principal executive (Zip Code)
offices)
(914) 347-2220
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock - $.01 par value
Preferred Stock Purchase Rights
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that Registrant
was required to file such reports) and (2) has been subject to such filing
requirements for at least the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Sect. 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
As of October 21, 1998, the aggregate market value of registrant's common
stock held by non-affiliates was approximately $81,000,000, based on a closing
sale price of $7.50 per share, and 10,999,740 shares of registrant's common
stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A of Emisphere Technologies, Inc. (the
"Company") amends and restates Item 10, Item 11, Item 12 and Item 13 of the
Company's Annual Report on Form 10-K for the fiscal year ended July 31, 1997.
2
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is certain information regarding the executive officers
and directors of the Company:
Name Age Position with the Company
- ----------------------------- --- ----------------------------
Michael M. Goldberg, M.D. 39 Chairman of the Board of
Directors and Chief
Executive Officer
Sam J. Milstein, Ph.D. 49 Director, President, Chief
Scientific Officer and
Secretary
Robert A. Baughman, Jr., 49 Senior Vice President,
Pharm.D., Ph.D. Development
Lewis H. Bender, M.B.A. 39 Senior Vice President,
Business Development
Barry B. Kanarek, M.D., Ph.D 51 Senior Vice President,
Clinical Affairs and Chief
Medical Officer
Jere E. Goyan, Ph.D. 68 Director
Mark I. Greene, M.D., Ph.D. 50 Director and scientific
advisor
Peter Barton Hutt, Esq. 63 Director
Howard M. Pack 80 Director
Joseph R. Robinson, Ph.D. 59 Director and scientific
advisor
Robert J. Levenson 57 Director
Michael M. Goldberg, M.D. has served as Chairman of the Board of Directors
since November 1991 and as Chief Executive Officer and a director of the
Company since August 1990. In addition, Dr. Goldberg served as President from
August 1990 to October 1995. Dr. Goldberg received a B.S. degree from
Rensselaer Polytechnic Institute and an M.D. from Albany Medical College of
Union University in 1982 and an M.B.A. from Columbia University Graduate School
of Business in 1985. Pursuant to an Employment Agreement dated as of October
6, 1995 between Dr. Goldberg and the Company, Dr. Goldberg is to serve as
Chairman and Chief Executive Officer until July 31, 2000 and the Company is to
use its best efforts to elect Dr. Goldberg as a director.
Sam J. Milstein, Ph.D. has been with the Company since September 1990, as a
director and Chief Scientific Officer since November 1991, as President since
October 1995, as Secretary since December 1990 and as a Co-Director of Science
and of Research and Development prior to November 1991. In addition, Dr.
Milstein served as Executive Vice President from November 1990 to October 1995.
Dr. Milstein received a B.S. degree from The City College of New York in 1970,
an M.S. in physical chemistry from the University of New Brunswick in 1975 and
a Ph.D. in biochemistry from New York University in 1980. Pursuant to an
Employment Agreement dated as of October 6, 1995 between Dr. Milstein and the
Company, Dr. Milstein is to serve as President and Chief Scientific Officer
until July 31, 2000 and the Company is to use its best efforts to elect Dr.
Milstein as a director.
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Robert A. Baughman, Jr., Pharm.D., Ph.D. has been with the Company since
September 1991, as Senior Vice President since September 1993, Director of
Development since June 1994 and Vice President and Director, Research and
Development of the Company prior thereto. Dr. Baughman received a B.S. degree
from Loyola University in 1974, a Pharm.D. from the University of California,
San Francisco in 1978 and a Ph.D. in pharmaceutical chemistry from the
University of California, San Francisco in 1982.
Lewis H. Bender, M.B.A. has been with the Company since 1993, as Senior Vice
President of Business Development since April 1997, Vice President of Business
Development since October 1995 and as Director of Business Development prior
thereto. Mr. Bender received a B.S. degree in 1981 and an M.S. in chemical
engineering in 1982 from the Massachusetts Institute of Technology, an M.A. in
international studies from the University of Pennsylvania and an M.B.A. from
the University of Pennsylvania, Wharton School of Management in 1993.
Barry B. Kanarek, M.D., Ph.D. joined the Company in May of 1998. He was
previously Vice President, Medical Operations for the Americas at ClinTrials
Research Inc. Prior thereto he was with Glaxo Wellcome, most recently as Vice
President of Medical Affairs, where he also served as acting head of Medical
Operations, sat on the U.S. site Operating Committee, co-chaired the Product
Strategy committee and acted as Chief Medical Officer during the integration
phase of Glaxo Wellcome. Dr. Kanarek received his M.D. and Ph.D. in 1977 from
the University of Salamanca in Spain.
Jere E. Goyan, Ph.D. is President, Chief Operating Officer, and a director of
Alteon, Inc., a development stage pharmaceutical company, where he started as
Senior Vice President Research and Development in January 1993. Prior thereto
he was a Professor of Pharmacy and Pharmaceutical Chemistry and the Dean of the
School of Pharmacy at the University of California, San Francisco, and has
served in various other academic, administrative and advisory positions,
including that of Commissioner of the FDA. He currently serves as a director
of the biopharmaceutical companies Atrix Laboratories Inc., SciClone
Pharmaceuticals and Boehringer Ingelheim.
Mark I. Greene, M.D., Ph.D. has been John Eckman Professor of Medical
Science, School of Medicine at the University of Pennsylvania for more than the
past five years. He currently serves as a director of Ribi ImmunoChem
Research, Inc., a biopharmaceutical company.
Peter Barton Hutt, Esq. has for more than the past five years been a partner
of the law firm of Covington & Burling in Washington, D.C., where he
specializes in the practice of food and drug law. He currently serves as a
director of the biopharmaceutical companies Interneuron Pharmaceuticals, Inc.
and Sparta Pharmaceuticals, Inc.
Howard M. Pack has served as a director of the Company since its inception in
April 1985 and served as Executive Vice President of Finance from the Company's
inception until October 1988.
Joseph R. Robinson, Ph.D. has been Professor of Pharmacy and Ophthalmology at
the University of Wisconsin for more than the past five years. He currently
serves as a director of Cima Laboratories, Inc., a pharmaceutical company.
Robert J. Levenson has been Executive Vice President of First Data
Corporation for more than the past five years. He previously held positions as
Senior Executive Vice President and Chief Operating officer of Medco
Containment Services, Inc. and as Group President of Automatic Data Processing,
Inc. He currently serves as a director of First Data Corporation, Superior
Telecom Inc. and Vestcom International, Inc.
Section 16(a) Beneficial Ownership Reporting and Compliance
Based solely on a review of the reports under Section 16(a) of the
Exchange Act and representations furnished to the Company during the last
fiscal year, the Company believes that each of the persons required to file
such reports is in compliance with all applicable filing requirements.
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ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information regarding the aggregate
compensation paid by the Company for the three fiscal years ended July 31, 1997
to the Company's Chief Executive Officer and other executive officers whose
total compensation exceeded $100,000 during the last fiscal year:
SUMMARY COMPENSATION TABLE
Fiscal Annual Stock
Name and Principal Position Year Compensation(1) Option Grants Other(2)
- ---------------------------- ------ --------------- ----------------- --------
Michael M. Goldberg......... 1998 $388,506 6,687 $9,792
Chairman of the Board and 1997 359,880 4,985 shares(3) 4,750
Chief Executive Officer 1996 335,349 756,749 shares 4,620
Sam J. Milstein............. 1998 $280,900 4,662 $9,792
President, Chief Scientific 1997 312,904 4,253 shares(3) 4,750
Officer and Secretary 1996 287,683 555,903 shares 3,850
Robert A. Baughman, Jr...... 1998 $175,000 2,844 $7,000
Senior Vice President and 1997 195,337 22,724 shares 4,750
Director of Development 1996 180,154 3,664 shares 3,175
Lewis H. Bender............. 1998 $180,096 3,052 $7,000
Senior Vice President, 1997 144,479 51,843 shares 2,748
Business Development 1996 120,125 77,396 shares 2,032
Barry B. Kanarek............ 1998 $ 65,625 126,611 shares $ -
Senior Vice President,
Clinical Affairs and
Chief Medical Officer (4)
_______________________________
(1) Annual compensation consists solely of base salary except that Drs.
Goldberg, Milstein and Baughman and Mr. Bender were also paid in lieu of
earned vacations $40,190, $0, $0 and $10,096, respectively, during the 1998
fiscal year, $31,280, $38,231, $22,212 and $0, respectively, during the
1997 fiscal year and $25,349, $33,873, $20,154 and $0, respectively, during
the 1996 fiscal year. As to each individual named, the aggregate amounts
of all perquisites and other personal benefits, securities and property not
included in the summary compensation table above or described below do not
exceed the lesser of $50,000 or 10% of the annual compensation.
(2) Other compensation consists solely of matching contributions made by the
Company under a defined contribution plan available to substantially all
employees.
(3) Does not include options with respect to 562,315 shares for Dr. Goldberg
and 346,716 shares for Dr. Milstein originally granted in 1992 in
connection with each of their respective employment agreements. By
resolution of the Company's Board of Directors adopted during the 1997
fiscal year, such options were deemed for all purposes to have been granted
under the Company's 1991 Stock Option Plan with respect to 262,315 shares
for Dr. Goldberg and 146,716 shares for Dr. Milstein and under the
Company's 1995 Non-Qualified Stock Option Plan with respect to 300,000
shares for Dr. Goldberg and 200,000 shares for Dr. Milstein. The Board
also extended from July 31, 1997 to July 31, 2002 the expiration dates for
such options.
(4) Dr. Kanarek became an executive officer of the Company in June of 1998.
-5-
The following table sets forth certain information relating to stock
option grants to the executive officers named above during the fiscal year
ended July 31, 1998:
STOCK OPTION GRANTS DURING THE FISCAL YEAR ENDED JULY 31, 1998
Percent Potential Realizable
of Total Value at Assumed
Number Option Annual Rates of Stock
of Shares Shares Exercise Price Appreciation
Underlying Granted Price Expir- for Option Term
Options to Em- per ation ----------------------
Name Granted<F1> ployees<F2> Share Date 5% 10%
- ----------------------- ----------- ----------- -------- -------- ---------- ----------
Michael M. Goldberg.... 975 <F3> $13.76 2/1/98 $ 2,368 $ 2,368
920 <F3> 14.025 5/1/98 2,277 2,277
2,161 <F3> 7.44 8/1/98 2,837 2,837
2,631 <F3> 6.27 11/1/98 2,837 2,837
Sam J. Milstein........ 786 <F3> $13.76 2/1/98 $ 1,909 $ 1,909
751 <F3> 14.025 5/1/98 1,859 1,859
1,416 <F3> 7.44 8/1/98 1,859 1,859
1,709 <F3> 6.27 11/1/98 1,859 1,859
Robert A. Baughman, Jr. 490 <F3> $13.76 2/1/98 $ 1,190 $ 1,190
468 <F3> 14.025 5/1/98 1,158 1,158
822 <F3> 7.44 8/1/98 1,079 1,079
1,064 <F3> 6.27 11/1/98 1,158 1,158
Lewis H. Bender........ 462 <F3> $13.76 2/1/98 $ 1,122 $ 1.122
441 <F3> 14.025 5/1/98 1,091 1,091
1,085 <F3> 7.44 8/1/98 1,425 1,425
1,064 <F3> 6.27 11/1/98 1,158 1,158
Barry B. Kanarek....... 125,000 30.1% $14.50 6/4/08 $1,139,872 $2,888,658
1,611 <F3> 6.27 11/1/98 1,737 1,737
____________________________
<FN>
<F1>Options that expired in 1998 were all granted under the Company's Employee
Stock Purchase Plan or Non-Qualified Employee Stock Purchase Plan at
exercise prices equal to the lower of the fair market value on the date of
grant or 85% of the fair market value on the date of exercise. Options
expiring in 2008 were all granted under the Company's 1991 Stock Option
Plan at prices equal to the fair market value on the date of grant.
<F2>The total number of option shares granted during the 1998 fiscal year to
employees includes 75,174 shares under the Company's Employee Stock
Purchase Plan or Non-Qualified Employee Stock Purchase Plan and 340,272
shares under the Company's 1991 Stock Option Plan.
<F3>Less than 1.0%
</FN>
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The following table sets forth information as to the exercises of options
during the fiscal year ended July 31, 1998 and the number and value of
unexercised options held by the executive officers named above as of July 31,
1998:
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
Exercises During
the Fiscal Year Number of
--------------------- Shares Underlying Value of Unexercised
Number Unexercised Options In-the-Money Options<F1>
of ----------------------- ------------------------
Shares Value Exer- Unexer- Exer- Unexer-
Name Acquired Realized cisable cisable cisable cisable
- ----------------------- -------- ----------- ------------- -------- ------------ ----------
Michael M. Goldberg.... 748 $ 2,051<F2> 1,337,497<F6> 300,000 $1,554,833 $600,000
850 2,544<F3>
975 40,298<F4>
920 2,323<F5>
Sam J. Milstein........ 603 $ 1,653<F2> 767,757 220,000 $ 921,058 $440,000
844 2,050<F3>
786 31,860<F4>
751 2,134<F5>
Robert A. Baughman, Jr. 398 $ 1,058<F2> 135,268 - $ 31,222 -
592 1,313<F3>
490 20,199<F4>
468 1,237<F5>
Lewis H. Bender........ 351 $ 827<F2> 53,176 88,800 $ 133,117 $122,175
427 1,026<F3>
462 11,104<F4>
441 946<F5>
Barry B. Kanarek....... - - 125,000 - - -
_______________________________
<FN>
<F1>Based on a closing price of $10.625 on July 31, 1998 on the Nasdaq National
Market.
<F2>Based on a closing price of $19.00 on August 1, 1997, the date of exercise,
on the Nasdaq National Market.
<F3>Based on a closing price of $19.375 on November 1, 1997, the date of
exercise, on the Nasdaq National Market.
<F4>Based on a closing price of $16.188 on February 2, 1998, the date of
exercise, on the Nasdaq National Market.
<F5>Based on a closing price of $16.50 on May 1, 1998, the date of exercise, on
the Nasdaq National Market.
<F6>Includes 130,000 shares with respect to which Dr. Goldberg has transferred
options to members of his family and with respect to which Dr. Goldberg
disclaims beneficial interest.
</FN>
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Compensation of Directors
Directors receive no cash compensation in their capacity as directors.
Directors who are not employees of the Company receive, pursuant to the
Company's Stock Option Plan for Outside Directors (the "Directors Plan"),
options to purchase shares of the Common Stock. Messrs. Hutt and Pack and Drs.
Goyan and Greene have each received an initial option to purchase 70,000 shares
under the Directors Plan in effect prior to January 29, 1997. Under the
Directors Plan as currently in effect, Dr. Robinson and Mr. Levenson have each
received an initial option to purchase 35,000 shares and Messrs. Hutt and Pack
and Dr. Goyan have each received an additional option to purchase 21,000
shares. The exercise prices are $13.00 per share for the initial options
granted to Dr. Goyan and Messrs. Hutt and Pack, $8.625 for the initial option
granted to Dr. Greene, $23.50 for the initial option granted to Dr. Robinson,
$6.125 for the initial option granted to Mr. Levenson and $13.75 for the
additional options granted to Messrs. Hutt and Pack and Dr. Goyan. In the
event the holder of an option ceases to serve as a director of the Company, the
option may be exercised with respect to the fully vested shares within six
months thereafter and will terminate immediately with respect to all unvested
shares.
In addition, for each meeting of the Board or a committee thereof
attended, directors have a right to receive, pursuant to the Directors Deferred
Compensation Stock Plan, a number of shares of the Common Stock, based on the
closing price of the Common Stock on the date of the meeting and an amount
determined by the Board as compensation for the meeting. For meetings attended
during the 1997 fiscal year, Drs. Goyan, Greene and Robinson and Messrs. Hutt
and Pack each earned the right to receive 114 shares.
Employment Agreements
The Company has entered into employment agreements with Michael M.
Goldberg, M.D. and Sam J. Milstein, Ph.D., expiring on July 31, 2001. Pursuant
to the agreements, Dr. Goldberg is to serve as Chairman and Chief Executive
Officer of the Company at an annual salary of $369,215 for the 1998 fiscal year
to increase at 6% per year, Dr. Milstein is to serve as President and Chief
Scientific Officer at an annual salary of $297,754 for the 1998 fiscal year to
increase at 6% per year and both are to be nominated to serve as members of the
Board of Directors. Also pursuant to the agreements, Dr. Goldberg was granted
an option to purchase 750,000 shares of the Common Stock and Dr. Milstein was
granted an option to purchase 550,000 shares. The options have an exercise
price of $8.625 per share and they expire on October 5, 2005 except that they
become earlier exercisable if the Company achieves certain milestones, with the
rate in no event being greater than either 25% of the shares for each milestone
achieved or 20% of the shares in any employment year. The Company milestones
required for exercisability of the options are (i) execution of a collaboration
agreement providing for the commercialization of a product utilizing the
Company's drug delivery technology and the payment of a royalty to the Company,
(ii) one or more financings by the Company that provide aggregate net proceeds
of at least $15,000,000 and (iii) any subsequent such collaboration agreement
or such financings.
The agreements provide that, upon (i) termination by the Company either
without cause or for any reason following a Change of Control (as defined in
the agreements) or (ii) termination by Dr. Goldberg or Dr. Milstein, as the
case may be, following an uncured breach or bankruptcy by the Company, the
Company will make severance payments equal to the greater of (i) the
compensation payable under the agreements from the date of termination to July
31, 2001 or (ii) one year's compensation under the agreements.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of October 16,
1998, except as noted, regarding the beneficial ownership of the Common Stock
by (i) each person or group known to the Company to be the beneficial owner of
more than 5% of the outstanding Common Stock, (ii) each director and nominee
for director of the Company, (iii) each executive officer of the Company named
below and (iv) all directors and executive officers of the Company as a group.
Except as otherwise specified, the named beneficial owner has sole voting and
investment power over the shares listed.
Amount and Nature of Percent
Name and Address of Beneficial Owner(1) Beneficial Ownership(2) of Class
- ----------------------------------------- ----------------------- --------
Amerindo Investment Advisors Inc. and
affiliates (3).......................... 1,162,300 10.6%
One Embarcardero Center, Suite 2300
San Francisco, California 94111-3162
Elan International Services Ltd.......... 940,000 8.5%
102 St James Court
Flatts Smiths FL04
Bermuda
INVESCO PLC and affiliates (4)........... 962,450 8.7%
11 Devonshire Square
London EC2M 4YR
England
Michael M. Goldberg, M.D................. 1,248,516(5) 10.2%
Sam J. Milstein, Ph.D.................... 768,844 7.0%
Howard M. Pack........................... 168,363(6) 1.5%
Jere E. Goyan, Ph.D...................... 77,000 *
Peter Barton Hutt, Esq................... 77,000 *
Mark I. Greene, M.D., Ph.D............... 57,000 *
Joseph R. Robinson, Ph.D................. 9,000 *
Robert J. Levenson (7)................... 8,000 *
Robert A. Baughman, Jr., Pharm.D., Ph.D.. 139,088 1.2%
Lewis H. Bender.......................... 57,884 *
Barry B. Kanarek, M.D., Ph.D............. 700 *
All directors and executive officers
as a group............................. 2,611,395(5)(6)(7) 19.2%
_______________________________
*Less than 1%
(1) Unless otherwise specified, the address of each beneficial owner is c/o the
Company, 765 Old Saw Mill River Road, Tarrytown, New York 10591.
(2) The number of shares set forth for each director and executive officer of
the Company includes the following number of shares with respect to which
such individual has the right, exercisable within 60 days, to acquire
beneficial ownership upon exercise of options granted by the Company:
Number of Shares
----------------
Dr. Goldberg....................... 1,207,497
Dr. Milstein....................... 767,757
Mr. Pack........................... 77,000
Dr. Goyan.......................... 77,000
Mr. Hutt........................... 77,000
Dr. Greene......................... 57,000
Dr. Robinson....................... 9,000
Dr. Baughman....................... 135,268
Mr. Bender......................... 53,176
All directors and executive
officers as a group.............. 2,460,698
(3) Based on a Schedule 13G/A filed February 13, 1998, Amerindo Investment
Advisors Inc., a California corporation, Amerindo Investment Advisors,
Inc., a Panama corporation, Alberto W. Vilar and Gary A. Tanaka share
voting and dispositive power with respect to 1,162,300 shares.
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(4) Based on a Schedule 13G/A filed February 12, 1998, INVESCO PLC, AMVESCAP
PLC, AVZ, Inc., AIM Management Group Inc., AMVESCAP Group Services, Inc.,
INVESCO, Inc., INVESCO North American Holdings, Inc., INVESCO Capital
Management, Inc., INVESCO Funds Group, Inc., INVESCO Management & Research,
Inc. and INVESCO Realty Advisers, Inc., all of which are English
corporations, share voting and dispositive power with respect to 962,450
shares.
(5) Does not include 130,000 shares with respect to which members of Dr.
Goldberg's family have the right to acquire beneficial ownership upon
exercise of options and with respect to which Dr. Goldberg disclaims
beneficial ownership.
(6) Does not include 331,519 shares beneficially owned by various members of
Mr. Pack's family, with respect to which Mr. Pack disclaims beneficial
ownership.
(7) Includes 1,000 shares held by the Robert J. and Mira Levenson Family
Foundation, with respect to which shares Mr. Levenson disclaims beneficial
ownership
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Any information required by this Item is included in Item 11 and is
incorporated herein by reference.
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SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EMISPHERE TECHNOLOGIES, INC.
Dated: November 30, 1998 by /s/Michael M. Goldberg
----------------------------
Michael M. Goldberg, M.D.
Chairman and Chief
Executive Officer
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